In a significant development for the semiconductor industry, Intel has reportedly secured Tesla as the first major customer for its upcoming 14A manufacturing process. The move marks a key milestone for Intel as it works to strengthen its contract chipmaking business and compete with TSMC.
Tesla CEO Elon Musk said the company plans to use Intel’s 14A process to manufacture chips for its Terafab project, an advanced AI chip complex being developed in Austin. Intel has not officially confirmed the deal but had earlier indicated it was in discussions with large customers for 14A technology.
The agreement is particularly important for Intel, as CEO Lip-Bu Tan had previously stated the company could exit its chip manufacturing business if it failed to secure external customers. Following the news, Intel’s shares rose 3.6% in extended trading.
Intel recently joined Tesla and SpaceX in the Terafab initiative, which aims to produce processors for robotics, data centres, and other advanced technologies. Musk said Tesla has significantly increased its capital investment plans to support future growth, although investors reacted cautiously, leading to a slight dip in Tesla’s stock.
The Terafab project is expected to include 2 advanced chip factories, one for cars and humanoid robots, and another for space-based data centres. However, several details, including funding, operations, and timelines, remain unclear. Musk has projected that Terafab could eventually generate 1 terawatt of computing capacity annually, compared to about 0.5 terawatt currently produced in the United States. Estimates suggest building such capacity could require between $5 trillion and $13 trillion in investment.
“Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time,” Musk said. “14A seems like the right move, and we have a great relationship with Intel.”
Industry experts see the partnership as a positive signal for Intel. “It’s important to have multiple partners as early design partners to help clean the pipe and work through needed learnings at the leading edge. They will definitely have scale, so a great first non-Intel customer,” said Ben Bajarin.
“Having a customer is more important than the timing,” added Jay Goldberg, noting that even existing Tesla demand could translate into meaningful chip volumes.
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